FDIC Insurance
About the FDIC
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects against the loss of insured deposits if an FDIC-insured bank or savings association fails. FDIC deposit insurance is backed by the full faith and credit of the United States government. Since the FDIC was established, no depositor has ever lost a single penny of FDIC-insured funds.
FDIC Insurance Coverage Basics
The FDIC insurance amount—officially called the standard maximum deposit insurance amount (or SMDIA)—that applies to each depositor of an FDIC-insured bank is at least $250,000. If a depositor’s funds held in one FDIC-insured bank total $250,000 or less, the deposits are fully insured. In addition, from December 31, 2010, through December 31, 2012, deposits in noninterest-bearing transaction accounts will be fully insured, regardless of the amount in the account. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.
Standard FDIC insurance coverage is determined by the rights and capacities in which a depositor’s funds are held. Therefore, a depositor can have more than $250,000 at one insured bank and still be fully insured: Funds held in different categories of legal ownership recognized by the FDIC receive separate insurance coverage as long as specified conditions are met, such as account titling requirements. For example, the FDIC provides separate insurance coverage for single ownership funds, joint ownership funds, funds held in certain individual retirement accounts, and funds held under revocable and irrevocable trust arrangements. (These are the ownership categories that apply to individual and family deposits.) Corporation/partnership/unincorporated association deposits, government deposits, and employee benefit plan deposits are also separately insured categories of legal ownership.
FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts, and CDs. FDIC insurance covers each depositor’s funds, dollar-for-dollar, including principal and any accrued interest, up to the standard maximum deposit insurance amount of $250,000 per ownership category. FDIC insurance is not applied on a per-account basis, with the exception ofnoninterest-bearing transaction accounts, which, from December 31, 2010, through December 31, 2012, will be fully insured, regardless of the amount in the account.
FDIC insurance does not cover other financial products and services that insured banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities, or municipal securities. FDIC insurance also does not apply to the contents of safe deposit boxes.
The Current Standard Maximum Deposit Insurance Amount Available per Ownership Category
| Noninterest-Bearing Transaction Accounts | From December 31, 2010, through December 31, 2012, unlimited coverage of funds held in checking accounts that do not earn interest |
| Single Ownership Funds | $250,000 per owner |
| Joint Ownership Funds | $250,000 per co-owner |
| IRAs and Certain Other Retirement Funds | $250,000 per owner |
| Revocable Trust Funds (i.e., funds held pursuant to informal trust arrangements, such as payable-on-death or “POD” accounts, and formal trust arrangements, such as attorney-drafted “living” or “family” trusts) |
$250,000 per owner, per eligible beneficiary, for up to five beneficiaries (more coverage available for six or more beneficiaries, subject to specific limitations and requirements) |
| Irrevocable Trust Funds | $250,000 per separate legal trust arrangement; higher limits can apply when certain conditions are met |
| Corporation, Partnership, and Unincorporated Association Funds | $250,000 per separate legal entity |
| Government (a.k.a. public unit) Funds | $250,000 per official custodian; higher limits can apply when certain conditions are met |
| Employee Benefit Plan Funds | $250,000 for the non-contingent, ascertainable interest of each participant |
| Examples of FDIC Insurance Coverage for Individual and Family Deposits Held at an FDIC-Insured Bank | |||
| Interest-Bearing Deposit Accounts | Balance | Insured | Uninsured |
| Husband Single Account | $250,000 | $250,000 | $0 |
| Wife Single Account | $250,000 | $250,000 | $0 |
| Husband & Wife Joint Account | $500,000 | $500,000 | $0 |
| Husband Account POD to Wife | $250,000 | $250,000 | $0 |
| Wife Account POD to Husband | $250,000 | $250,000 | $0 |
| Husband & Wife Account POD to Someone Else | $500,000 | $500,000 | $0 |
| Totals | $2,000,000 | $2,000,000 | $0 |
| Noninterest-Bearing Transaction Accounts | |||
| Any Account Ownership | Any Amount | Unlimited coverage for two years: from December 31, 2010, through December 31, 2012 | |
More Information Is Readily Available to You
The FDIC’s website (fdic.gov) has a number of tools and resources that you may find helpful to better understand FDIC insurance coverage and how it applies to funds held in different ownership rights and capacities. The FDIC’s website also has an insurance “calculator” that you can use to determine how you may be able to maximize your coverage at an insured bank.
